Medicare Crisis in 2024 or Not

Karl Denninger thinks that 2024 will be the beginning of the end.

But will it go up in smoke by 2024 or thereabouts, when Medicare runs out of buffer and its 75% operating deficit becomes fully exposed in the budget?

Yep.  That much I'm sure of.

The handle has been pulled and we're circling the drain.

It Won't Be A Repeat Of 2008

There is a known, hard date out there of 2024.  I remind you from my previous article that by 2024 Medicare, which currently spends about $1,100 billion a year yet only takes in about $250 billion, will run out of Treasuries it can redeem with the US Treasury (and by doing so force the Treasury to issue same into the public market, since the US Treasury has no money and operates on a perpetual deficit.)  That this is going to happen, and when it does that Medicare will be short some 75% of what it is asked to pay, is a known fact.  That said event will occur approximately six years from now is also a known fact.  While the actual end date might move a year either direction or two that doesn't matter because once again the market never lets you actually hit the wall.
'I Won't Be Here When It Blows'

The people of this nation have the ability to put a stop to what is otherwise going to be a certain collapse -- not just in asset markets but of the government itself.  This is not going to happen in 2024 when Medicare cannot pay it will happen before that date because in the history of the world markets have never allowed an actual end date to be reached before they throw up all over the impending disaster.  To expect otherwise is to claim that literally everyone in the world is stupid beyond words.

May I point out that when Medicare's funds are exhausted that $1.1 trillion dollar expenditure (and rising) from last year will be immediately reduced by 75%?  That's right -- they took in just $260 billion last fiscal year in Medicare taxes but spent four times that amount.  If you think the government can immediately add $800 billion to the deficit without interest rates spiking to 10% or more overnight -- which instantly crashes the markets and government both -- you have rocks in your head.

Revolt Or Collapse: Pick One

I wouldn't want to bet against The Karl, but I'm playing devil's advocate here.  I don't understand his math.  According to CMS, Medicare won't be exhausted until 2026, and even then the deficit is "only" $50 billion per year, which can be paid out of the general budget.

Even if The Karl is right, and there will be an $800 billion added to the deficit annually, can't The Fed jump in and buy treasury bonds to fund them?

I guess I should apply the same analysis to my claim of a Social Security crisis in 2032. We are talking about a 1.6% GDP ($320 billion, if GDP=$20 trillion) deficit annually.  Can't the general budget deficit just go up to pay this?  Which would make the budget deficit go up from maybe $1.5 trillion per year in 2031 to maybe $1.8 trillion in 2032.  We can handle $2 trillion per year deficits, right?  We can count to really big numbers on our fingers and toes and with the help of terabyte and exabyte computers.  And watch the national debt go up into infinity and absurdity until the dollar stops being the world's reserve currency and the magical money tree dries up.

So I am saying that I don't think there will be a crisis in 2024 or in 2032 but it surely will happen but maybe not in my lifetime.